Aikman (beginning capital, $60,000) and Rory (beginning capital $90,000) are par

Question

Aikman (beginning capital, $60,000) and Rory (beginning capital $90,000) are partners. During 2012, the partnership earned net income of $70,000, and Aikman made drawings of $18,000 while Rory made drawings of $24,000. (a) Assume the partnership income-sharing agreement calls for income to be divided 45% to Aikman and 55% to Rory. Prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (b) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $30,000 to Aikman and $25,000 to Rory, with the remainder divided 45% to Aikman and 55% to Rory. Prepare the journal entry to record the allocation of net income. (c) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $40,000 to Aikman and $35,000 to Rory, interest of 10% on beginning capital, and the remainder divided 50%

Explanation / Answer

a) .45*70000 = 31500 to aikman and 38500 to rory from income net capital of aikman = 91500 rory = 128500 after withdrawl income of aikman = 73500 rory = 104500 journal entry debit credit For aikman cash..............................................31500 revenue...........................................................31500 withdrawl for personal use.....................18000 cash...............................................................18000 For rory cash..............................................38500 revenue...........................................................38500 withdrawl for personal use.....................24000 cash...............................................................24000 b) to aikman = 36750 to rory = 33250 For aikman cash..............................................36750 revenue...........................................................36750 withdrawl for personal use.....................18000 cash...............................................................18000 For rory cash..............................................33250 revenue...........................................................33250 withdrawl for personal use.....................24000 cash...............................................................24000

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